By Ian Sayson and Cecilia Yap March 17 (Bloomberg) — San Miguel Corp. plans to raise $1 billion selling stakes in its food, packaging and liquor businesses to fund the Philippines’ biggest food and drinks maker’s growth and acquisitions. The proceeds will be used to accelerate a $2 billion expansion into infrastructure, energy, telecommunications and mining, President Ramon Ang , 56, said in an interview at the company’s headquarters today. “We are interested in anything that will add value. This company will fly.” The asset sales would increase the amount Ang and Chairman Eduardo Cojuangco have raised since 2007 to $6 billion as they move into industries with triple the return of San Miguel’s traditional businesses. The Manila-based company , which has made San Miguel Beer for more than a century, has offers for its hotdog maker, packaging unit and gin distillery, Ang said. “It’s a good corporate strategy because food and beverages have reached a level where growth is wanting,” Marvin Fausto , chief investment officer at Banco de Oro Unibank Inc., which manages $9.60 billion, said in a phone interview from Manila. “The opportunities are out there, so management has to move fast and grab what they can.” San Miguel’s A shares, restricted to local investors, were unchanged at 74 pesos in Manila trading and have gained 8 percent this year, beating the 1 percent advance by the benchmark Philippine Stock Exchange Index. Its B shares , which foreigners can buy, have climbed 7.3 percent this year. Pure Foods, Ginebra The company has $2 billion that it can spend on expansion and acquisitions within a year, said Ang. San Miguel had 153 billion pesos ($3.35 billion) in cash as of September. San Miguel will announce “soon” the acquisition of gold, copper, nickel, iron and lead assets for its venture into mining, said Ang, who was named president in March 2002. “These are capital-intensive ventures,” said Rico Gomez , who helps manage $1 billion at Manila-based Rizal Commercial Banking Corp. “San Miguel isn’t moving too fast because it’s been preparing for this since it accepted the maturity of the domestic beer business a long, long time ago.” San Miguel , which controls 95 percent of the Philippine beer market, has received offers for 49 percent each of canned-meat and hotdog maker San Miguel Pure Foods Co. and its packaging business, Ang said. The company plans to sell its Ginebra San Miguel Inc. gin maker to its San Miguel Brewery Inc. unit, he said. The brewery is “not available” for sale, he said. Kirin Holdings Co. , which owns 48 percent of San Miguel Brewery , said this month it was interested in acquiring a majority if its parent was willing to sell. Ongpin, Zobel San Miguel is accelerating its expansion as Top Frontier Investment Holdings Inc., owned by the foodmaker itself and two of its directors, has won control of the voting rights to 86 percent of its shares. Top Frontier, whose shareholders include San Miguel directors Roberto Ongpin and Inigo Zobel , has started a 75-peso-a-share tender for the rest of the foodmaker. San Miguel said in January the consolidation of ownership will help management drive through the expansion plan. Top Frontier will sell down its stake within a year as part of an agreement reached with San Miguel to broaden the company’s ownership, Ang said. “San Miguel will not be controlled by a few shareholders,” he said. San Miguel , which has acquired 2,000 megawatts of generating capacity in the past year, plans to build 3,000 megawatts of capacity in three to five years and may also buy power distributors, Ang said. The company will also bid for state-owned power plants and has expressed interest in buying the government’s 10 percent stake in Malampaya, the nation’s offshore gas field, he said. Road and Rail Ang said the company’s planned infrastructure projects include a tollway and railway that will run from the north to south end of Luzon, the nation’s biggest island, a commuter train in Manila and expansion of an airport serving Boracay Island, which attracts 600,000 visitors a year. The company will bring in a partner this year for its Philippine mobile-phone venture, he said. “Within a year we will probably be done with our diversification strategy,” Ang said. “It has to be that fast. The share price doesn’t reflect the true value of San Miguel .” Cojuangco retook control of San Miguel in 1998, ending a 12-year absence that followed the ouster of his political ally, Philippine dictator Ferdinand Marcos , in 1986. San Miguel , which opened its brewery in 1890, eight years before the Philippines declared independence from Spain, has raised $2.44 billion from the sale of beer assets in the past year. The disposal helped drive a 173 percent increase in San Miguel’s nine-month profit to 57 billion pesos. “ San Miguel is encashing its food and beverage businesses to move into higher growth ventures,” Banco de Oro’s Fausto said. “It’s dipping its hands into all kinds of businesses they can get into and where they have some level of competence.” To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net
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San Miguel Plans $1 Billion in Asset Sales to Finance Expansion, Ang Says
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